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Advanced Wealth Management Course (IIBF) - Paper 4

Part I: Ch 1: Introduction to Insurance and Its Fundamental Principles

Q1.

(I) The party agreeing to pay for the losses is known as the insured. (II) The party who is compensated for the loss suffered is called the insurer.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q2.

Rash driving is an example of ____________ hazard.

Moral hazard

Morale hazard

Physical hazard

Legal hazard

Q3.

Defective wiring in a building is an example of ___________ hazard.

Physical hazard

Moral hazard

Morale hazard

Legal hazard

Q4.

The exorbitant fees charged by a doctor are an example of ____________ hazard.

Legal hazard

Physical hazard

Moral Hazard

Morale hazard

Q5.

The risks which are relate to the social environment called:

Static risks

Dynamic risks

Fundamental risks

Speculative risks

Q6.

Speculative risks affect the entire economy or large number of persons or groups within the community.

True

False

Q7.

(I) Particular risk involves losses that arise out of individual events. (II) Fundamental risks describe a situation where the consequence can be either a profit or a loss.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q8.

Which risk consists of losses actually suffered by households and business units as a result of pure risk events?

Liability risk

Property risk

Primary burden of risk

Secondary burden risk

Q9.

(I) Static risks – events taking place within a stable environment. (II) Secondary burden of risk consists of costs arising as a result of uncertainty faced by those who are exposed to a loss situation.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q10.

(I) The principle of contribution determines the extent of insurer’s liability in the case of loss. (II) The principle of insurable interest is relevant to both life and general insurance.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q11.

The principle of proximate cause that determines how to proceed with processing a claim lodged by an insured.

True

False

Q12.

Which principle refers to the rights that an insurer acquires vis-à-vis the insured when the insurer has paid him an indemnity?

Principle of proximate cause

Principle of indemnity

Principle of contribution

Principle of subrogation

Q13.

(I) The principle of indemnity tells us how the liability is to be met when the insured has taken insurance with more than one insurer. (II) Subrogation involves the transfer of all rights and remedies, with respect to the subject matter of insurance, from the insured to the insurer.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

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